but a conservative sample developed by the company for the purpose of calculating the Stochastic Amount for policies within the scope of this report. DD.
Prudent Estimate Assumption. A deterministic assumption, used to represent a Risk Factor, developed by applying a Margin to Anticipated Experience for that Risk Factor.
EE.
Qualified Actuary. An actuary who meets the qualifications as defined in Section 11 (Certification and Documentation Requirements) to certify that the amounts for the policies subject to this report have been calculated following all applicable laws, regulations, actuarial guidelines (AGs) and Actuarial Standards of Practice. The Qualified Actuary shall be referred to throughout this report as “the actuary�.
FF.
Risk Factor. An aspect of future experience that is not fully predictable on the Valuation Date and that can affect the future financial results arising from the provisions of a Policy.
GG.
Reported Amount. The minimum amount as of the Valuation Date for the policies falling within the scope of this report using a principle-based approach. The Reported Amount equals the Total Asset Requirement less the statutory value on the valuation date of the liabilities included in the determination of the Total Asset Requirement.
HH.
Revenue Sharing. Any arrangement or understanding by which an entity responsible for providing investment or other types of services makes payments to the company (or to one of its affiliates). Such payments are typically in exchange for administrative services provided by the company (or its affiliate), such as marketing, distribution and record-keeping. Only payments that are attributable to charges or fees taken from the underlying variable funds or mutual funds supporting the policies that fall under the scope of this report shall be included in the definition of Revenue Sharing.
II.
Scenario. A single path of outcomes used in a Cash Flow Model, such as a path of future interest rates, equity performance, and separate account fund performance. It could also include outcomes related to policyholder behavior (e.g., lapses) and company experience (e.g., mortality).
JJ.
Scenario Amount. Equals the amount determined in Section 6(G)(6) for a given set of policies for a given Scenario that is used as a step in the calculation of the Stochastic Amount.
KK.
Starting Assets. The assets assigned to a Business Segment prior to the calculation of the Reported Amount, and valued as of the Projection Start Date.
LL.
Stochastic Amount. The amount determined by applying a prescribed CTE level to the distribution of Scenario Amounts over a broad range of stochastically generated Scenarios calculated using Prudent Estimate Assumptions for all assumptions not stochastically modeled.
MM.
Stochastic Exclusion Test. A test to determine whether the block of policies being tested is considered to have material tail risk arising from interest rate movements or equity performance. Passing the test allows the company to exclude the block of policies from the stochastic modeling calculation, and instead, use the current C3 RBC factors in determining the C3 amount on that block.
NN.
Total Asset Requirement. The minimum amount as of the Valuation Date for the policies falling within the scope of this report using a principle-based approach and equals the sum over all Business Segments of the Stochastic Amount, Alternative Amount or Factor-based Amount for each Business Segment or combination of Business Segments, plus any Nonmodeled Amount related to each segment or combination of segments.
OO.
Valuation Date. The date for which the Reported Amount is to be valued as required by the NAIC Life Risk Based Capital Instructions.
PP.
Working Reserve. The assumed reserve used in the projections of Accumulated Deficiencies supporting the calculation of the Scenario Amount. Page 14 of 48